Proparco allocated a EUR 34.5m loan with an 18-year maturity to finance the construction and operation of a photovoltaic solar power plant in Senegal.
This project combines the expertise of three French energy specialists: the Meridiam investment fund, the French manufacturer specialized in solar energy, Solairedirect (Engie), and Schneider Electric. It will develop energy provision in Senegal with a lower generation cost, while reducing greenhouse gas emissions. It marks the first stage in the country materializing the commitments it made at COP21 in December 2015.
Construction of West Africa’s largest solar power plant
With a nominal capacity of 30 MWc, the Senergy solar power plant will be the largest in West Africa. It will be located near Méouane, in the Thiès region in northwest Dakar. Its commissioning is scheduled for early 2017. The investment project also provides for the construction of grid connection infrastructure for the public purchaser SENELEC – with which a 25-year power purchase agreement has been signed. Its total cost is estimated at FCFA 28bn (EUR 43.2m). The new power plant will supply electricity equivalent to the annual consumption of 226,500 inhabitants at a more competitive price than the country’s thermal power plants.
Combining the expertise of France’s Proparco, Meridiam, Solairedirect and Schneider Electric
Since early 2015, the Senergy solar project has been developed by the investment company Meridiam, in partnership with the French manufacturer Solairedirect, as well as with the project’s initial shareholders, the Senegal Strategic Sovereign Investment Fund (FONSIS) and Senergy SUARL, a Senegalese company which develops energy projects. Meridiam, the leader in private investment in infrastructure with a portfolio under management of EUR 5bn, set its sights on Africa in 2014 with the creation of the Meridiam Infrastructure Africa Fund. It has partnered with Solairedirect, a forerunner in the development of solar energy in France, to develop and cofinance projects in Africa. Under this project, Solairedirect will be responsible for building the power plant and Schneider Electric will supply the inverters and transformers. Proparco is the project’s main funder and the only debt lender.
Ensuring energy security and diversifying generation sources in Senegal
Today, only 33% of the population of Senegal has access to electricity. The power sector remains modest in size with 650 MW of installed capacity. In addition to the low generation capacity, there are the problems of the frequent and regular power outages which affect the country’s populations and economy, and an extremely high electricity cost for users.
The commissioning of the new Senergy power plant will contribute to achieving the Government’s Emerging Senegal Plan, which provides for a significant strengthening of power generation capacity. The project will also initiate the momentum towards diversifying Senegal’s energy mix. It is currently largely based on fossil fuels, which account for 90% of the mix. In addition, it will reduce annual greenhouse gas emissions by 34,000 teq C02, and will thereby contribute to the implementation of the commitments made by Senegal at COP21.
Targeting solar energy in Africa
According to NSPRI (National Solar Power Research Institute), a number of African countries benefit from 325 days of sunshine a year and a daily radiation of between 4 kWh and 6 kWh per m2. Sub-Saharan Africa has one of the highest potentials for solar energy generation in the world. The significant reduction in the equipment costs in recent years is conducive to its development in Africa. However, investments continue to be largely insufficient to achieve this potential. Access to long-term financing is essential in order to cover the significant initial equity requirements. Proparco provides a response by offering private developers long-term debt and equity financing: it has longstanding experience in financing renewable energies and is one of the first financial institutions to support these new energies in Africa.